Fitch: Lower Profits and Weaker Asset Quality Anticipated for Qatar’s Islamic Banking Sector for 2020

Fitch Ratings (Fitch) expects Qatar’s Islamic banking sector to be impacted by lower oil prices and the COVID-19 pandemic, with profitability seen to be taking a hit in 2020. According to Fitch, the Islamic banking sector will see lower profit rates, lower business volumes, as well as higher financing impairment charges in 2020.

A weakening in asset quality will be masked in the short-term, by financing deferral programmes and banks having regulatory flexibility with regards to the recognition of impairments. Fitch notes that continued economic disruptions will see weaker asset quality and profitability putting pressure on capital buffers, which remain adequate at present.

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